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Global Economy

Strike The Women, You Strike The Rock, You Will Be Crushed

What constitutes a crisis worthy of global attention? When a regional bank in the United States falls victim to the inversion of the yield curve (i.e., when short-term bond interest rates become higher than long-term rates), the Earth nearly stops spinning. The collapse of Silicon Valley Bank (SVB) – one of the most important financiers of technology start-ups in the United States – on 10 March presaged wider chaos in the Western financial world. In the days after the SVB debacle, Signature Bank, one of the few banks to accept cryptocurrency deposits, faced bankruptcy, and then Credit Suisse, an established European bank set up in 1856, fell due its longstanding poor management of risk.

Study: West Is Out Of Touch With Rest Of World Politically

A study by an elite European government-funded think tank found that, while the United States and Europe are growing closer together, the West is increasingly out of touch politically with the rest of the world. The report, from the EU member state-financed European Council on Foreign Relations, conceded that the system of “American global supremacy” is in rapid decline, and many people in the Global South want a new “multipolar world”. The series of polls concluded that NATO’s proxy war in “Ukraine confirmed the renewed centrality of American power to Europe”, uniting the West under Washington’s leadership.

Converging Debt Crises

An enormous debt bomb threatens the US federal government and the nation’s financial system unless warring politicians can agree on a plan to defuse it. However, there are even bigger debt bombs ticking away beneath us all, of which fewer people are aware. It may be impossible to disarm all of them, but action is required to minimize the casualties. Let’s start by focusing on the immediate US debt threat, then widen our view to take in longer-term and more serious liabilities that have the potential to bring down the entire global industrial economy.

Inside Latin America’s New Currency Plan, With Andrés Arauz

Geopolitical Economy Report editor Ben Norton spoke with Ecuadorian economist Andrés Arauz, a former presidential candidate who came close to winning the 2021 elections. Arauz discussed Latin America’s attempt to create a new currency and regional financial architecture, to challenge what he described as the “hegemonic, neo-colonial” US dollar-dominated system. “We need the type of bank that can really serve the Global South”, he urged, calling for a “clearing and settlement bank that can allow for these transactions to take place, and that is not afraid of sanctions from the United States”.

Reasons For An Argentina-Brazil Currency Union

Even before German Chancellor Olaf Scholz met newly re-elected President Lula da Silva in Brasília last week, the latter had visited neighbouring Argentina, where he floated the idea of creating a common currency union for the two countries. The international response? Shaking heads. “It’s a terrible idea,” tweeted Paul Krugman, Nobel laureate in economics. In the German weekly Die Zeit, Thomas Fischermann wrote about a “dream money of the South.” So, was the announcement of a common currency for southern Latin America just talk? A monetary union of all of Latin America would cover 5 percent of global gross domestic product (GDP) – in comparison with the euro’s 14 percent, estimates the Financial Times.

Global Economic Forecast Reveals The Perils Of US Addiction To War

The International Monetary Fund (IMF) has updated its global economic outlook for the current year and the predictions for the West remain grim. U.S. economic growth is set to slow to just 1.4 percent in 2023. The situation is worse in Europe, where leading EU countries will experience near zero growth. The IMF cited high interest rates in the U.S., as well as the economic shocks of the Ukraine crisis as reasons for the West's economic slowdown. Nonetheless, this only tells a part of the story. Economic growth is determined by much more than momentary shifts in the world situation. Inflation, wage stagnation and slow growth are not givens, even in difficult times. If this were the case, the IMF's projected growth rates for China and the U.S. would be the same or similar. Yet, China is predicted to grow about four to five times faster than the U.S. in 2023.

US ‘Neo-Imperialist’ Dollar Scheme Explained By Yanis Varoufakis

Economist and former Greek Finance Minister Yanis Varoufakis said in a speech this January that the United States is leading a “new, audacious imperialism”, which he calls “neo-imperialism”. “Neo-imperialism’s highest form” is “globalization, financialized capitalist globalization”, Varoufakis added, stressing that this system is based on the dominance of the US dollar.

Presenting: The Havana Declaration On The New International Economic Order

Recalling the role of the Cuban Revolution in the struggle to unite the Southern nations of the world, and the spirit of the 1966 Havana Tricontinental Conference that convened peoples from Asia, Africa and Latin America to chart a path to collective liberation in the face of severe global crises and sustained imperial subjugation; Hearing the echoes of that history today, as crises of hunger, disease, and war once again overwhelm the world, compounded by a rapidly changing climate and the droughts, floods, and hurricanes that not only threaten to inflame conflicts between peoples, but also risk the extinction of humanity at large; Celebrating the legacy of the anti-colonial struggle, and the victories won by combining a program of sovereign development at home, solidarity for national liberation abroad, and a strong Southern bloc to force concessions to its interests, culminating in the adoption of the UN Declaration on the Establishment of a New International Economic Order (NIEO);

Santiago Declaration Envisions End Of Neoliberalism Death Spiral

An international coalition made up of more than 200 trade unions and progressive advocacy groups on Thursday published the Santiago Declaration, a manifesto for "a complete overhaul of our global economic system." The undeniably anti-neoliberal document proclaiming that "our future is public" is the product of a meeting held in Chile—the "laboratory of neoliberalism" where Milton Friedman and his University of Chicago acolytes' upwardly redistributive economic model was first imposed at gunpoint by Gen. Augusto Pinochet's military junta. From November 29 to December 2, more than 1,000 organizers from over 100 countries gathered in Santiago and virtually to germinate a left-wing movement against "the dominant paradigm of growth, privatization, and commodification." "We are at a critical juncture," the manifesto begins.

Brazil And Argentina To Advance South American Currency

Alberto Fernandez and Luiz Inacio Lula da Silva are preparing to relaunch the strategic alliance between Argentina and Brazil this week in Buenos Aires. The two will meet for the first presidential meeting between Brazil and Argentina in more than three years. Immediately after, the VII Summit of CELAC will take place in the same city. The forum that brings together the 33 countries of the Latin American and Caribbean region and which, since last year, has been under the presidency of Argentina. The event will mark the return of Brazil to this mechanism of dialogue and regional consultation. According to a statement published by the two presidents, there are multiple areas in which the two countries will work together to improve the quality of life of their citizens; “such as the fight against hunger and poverty, health, education, sustainable development, climate change and the reduction of all forms of inequalities.”

Multipolar Economic Order

The international economic system had been dominated for decades by the United States, but this financial architecture is rapidly fracturing with the creation of new institutions in the Global South. The BRICS bloc of Brazil, Russia, India, China, and South Africa is working “to develop a fairer system of monetary exchange”, to challenge the “dominance of the dollar”, South Africa’s foreign minister has revealed. Saudi Arabia publicly confirmed that it is considering selling its oil in other currencies. China’s President Xi Jinping said Beijing will buy energy from the Persian Gulf states in its own currency, the renminbi. Prominent economist Zoltan Pozsar, of the Swiss investment bank Credit Suisse, has observed that the “unipolar era” of US hegemony is quickly being replaced with a new “multipolar” order of “one world, two systems”.

Richest 1% Took 2/3rds Of Global Wealth Since 2020

In the past decade, the richest 1% of people on Earth sucked up half of all new wealth. In 2020 and 2021, the richest 1% took nearly two-thirds of all new wealth – six times greater than the wealth made by the poorest 90% of the global population. “Since 2020, for every dollar of new global wealth gained by someone in the bottom 90%, one of the world’s billionaires has gained $1.7 million”, wrote Oxfam. In the meantime, global poverty is getting worse, not better. These shocking statistics were published in “Survival of the Richest“, a report authored by Oxfam, an international humanitarian organization dedicated to fighting poverty and hunger. The document details how, while hundreds of billions of working people across the planet suffer from hunger, insecurity, rising costs of living, and decreasing wages, “The very richest have become dramatically richer and corporate profits have hit record highs, driving an explosion of inequality”.

Davos Elites Can’t Solve The Problems They Create

At the start of each year, the World Economic Forum—organiser of the annual Davos conference currently underway in Switzerland—releases its list of the ‘global risks’ expected to dominate over the following twelve months. This year, researchers at the WEF decided that these risks are so great, and so interwoven, that we are now entering an era of ‘polycrisis’. The clearest risk in the immediate term is a global recession. The UK, most of Europe and the US are pretty much guaranteed to go into recession in 2023. The downturn will be worse in Europe due to the ongoing energy crisis and the war in Ukraine. The fact that an inflationary crisis—and, relatedly, a cost of living crisis—is taking place alongside this economic downturn makes the outlook even more grim. We’ve had a decade of slow growth and, looking ahead, it’s hard to see where growth is going to come from in the future.

The New World Economy

Belém, Brazil – I inaugurate this new series of columns in a New Year and a new beginning for Brazil with the inauguration of President Lula da Silva. His well-wishers poured out across the country in a revival of hope for Brazil after four years of disastrous rule under his right-wing predecessor, Jair Bolsonaro, who had fled Brazil for Florida on the eve of Lula’s inauguration. Bolsonaro left behind a mob that rampaged government office buildings before being arrested in large numbers by the police. The mob tactics will not stop Lula, nor will they have a long-term effect in the US, where Donald Trump’s similar maneuvers on January 6, 2021, were also shut down. In both cases, demagogic politicians used social media to rile up a mob; in both cases, the mob was put down within the day. The real issue, in my mind, is not the mob, but the deeper changes in the world that are generating growing tensions in world politics and economy.

Multipolarity And The Decline Of US Hegemony

[Unlike] all those people talking about globalization and U.S. hegemony, Michael could see, and I also could see, the fractures underlying the system. My own approach has been characterized by such skepticism about enduring Western dominance, U.S. hegemony, dollar dominance, etc. And after thinking and writing about small bits of it for a couple of decades I eventually came up with this book, Geopolitical Economy, from which Ben [Norton] has also taken the title of Geopolitical Economy Report, with which of course we are collaborating. In Geopolitical Economy, I question the dominant cosmopolitan understandings of the world. In ‘globalization discourse’ the world is seamlessly united by markets. In ‘American hegemony discourse’, or ‘hegemony-stability discourse’, the world is united by a single leading power. None of these narratives are really true, and the advance of multipolarity, which I’ve argued goes back at least to the 1870s, continues apace.
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